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Greece Approves Reforms, Clearing Hurdle For Bailout Deal

Greek Prime Minister Alexis Tsipras listens to Finance Minister Euclid Tsakalotos as Justice Minister Nikos Paraskevopoulos looks on during a parliamentary session in Athens on Thursday. Yiannakis Kourtoglou/Reuters/Landov hide caption

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Yiannakis Kourtoglou/Reuters/Landov

Greek Prime Minister Alexis Tsipras listens to Finance Minister Euclid Tsakalotos as Justice Minister Nikos Paraskevopoulos looks on during a parliamentary session in Athens on Thursday.

Yiannakis Kourtoglou/Reuters/Landov

Greek lawmakers have approved a set of overhauls that were the last obstacles standing between Athens and a desperately needed 86 billion euro line of credit, which is being fronted by creditors along with a demand for domestic reforms.

The latest measures include a restructuring of the banking and judicial systems, passed easily (230-63 with five abstentions) despite thousands of anti-austerity protesters demonstrating loudly outside the Parliament building.

Even so, "Prime Minister Alexis Tsipras was able to win over only two additional members of his leftist Syriza party compared with the first major vote last week on the bailout accord. Most of the party's hard-liners continued to rail against what they said was the creditors' 'blackmail' and voted no, making it likely that new elections would be held in the fall," according to The New York Times.

Thirty-one members of Tsipras' leftist Syriza party, including former Finance Minister Yanis Varoufakis — who was a key figure in negotiations with the European Union before being forced out days ago — voted against the measures.

"We're not done here," Tsipras told Parliament in an effort to placate concerns.

"We are fighting to improve the final text of the deal. We will fight for countermeasures and for funds for society," he told lawmakers.

The judicial overhaul passed is meant to reduce the backlog of cases, particularly revenue-related cases. The banking changes are aimed at reducing the risk to European lenders from Greek banking crises, according to The Associated Press.

As The Financial Times notes:

"Repeating the same arguments he used in a debate last week on the first round of reforms, Mr Tsipras said he had been forced to choose between a Grexit, a disorderly default or implementing a tough economic [program].

"'We must all adapt ourselves to this new situation,' he said, claiming that 'Europe's conservative forces had achieved only a Pyrrhic victory over Greece.'"

Meanwhile, The Guardian reports that the third bailout of Greece since 2010 will not keep the country from plunging into recession:

"The Foundation for Economic & Industrial Research (IOBE) has abandoned its prediction from April that Greek GDP would rise by 1 percent this year, given the turmoil in the economy since capital controls were imposed.

"IOBE now fears that the economy will shrink by between 2 percent and 2.5 percent in 2015, due to the damage caused to exports, tourism, business investment and consumer spending."